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Manafort Under Scrutiny For $40 Million In “Suspicious” Transactions

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Manafort Under Scrutiny For $40 Million In “Suspicious” Transactions

As the special counsel investigated President Donald Trump’s former campaign manager Paul Manafort, authorities obtained details on “suspicious” banking activity that was first unearthed in 2014 and 2015. Those records were part of an FBI operation to track international kleptocracy that ultimately failed, but which Robert Mueller’s team resurrected.

Federal law enforcement officials have identified more than $40 million in “suspicious” financial transactions to and from companies controlled by President Donald Trump’s former campaign manager Paul Manafort — a much larger sum than was cited in his October indictment on money laundering charges.

The vast web of transactions was unraveled mainly in 2014 and 2015 during an FBI operation to fight international kleptocracy that ultimately fizzled. The story of that failed effort — and its resurrection by special counsel Robert Mueller as he investigated whether the Trump campaign colluded with Russia to interfere with the 2016 election — has never been fully told.

But it explains how the special counsel was able to swiftly bring charges against Manafort for complex financial crimes dating as far back as 2008 — and it shows that Mueller could still wield immense leverage as he seeks to compel Manafort to cooperate in the ongoing investigation.

Last week, Mueller’s team told a judge that it had evidence Manafort committed bank fraud, and news organizations have reported that the special counsel may be preparing additional charges.

Manafort’s spokesperson declined to comment for this story, but Manafort pleaded not guilty to all charges in the October indictment. In the past, Manafort has maintained that his financial dealings have all been above board and proper. Manafort is also suing the Justice Department, seeking to overturn the appointment of the special counsel on grounds that Mueller’s mandate is too broad and gives him “carte blanche to investigate and pursue criminal charges in connection with anything he stumbles across.”

The kleptocracy squad

In 2014, then–attorney general Eric Holder announced an FBI team that would tackle international kleptocracy — and its first target would be ousted Ukrainian president Viktor Yanukovych, Manafort’s longtime client and a close ally of Russian President Vladimir Putin.

To find the hundreds of millions or even billions of dollars Yanukovych and his aides were suspected of stealing, the task force scoured the globe, working with governments in Cyprus, Latvia, Ukraine, and elsewhere, said two former federal law enforcement officials with direct knowledge of the effort. In doing so, the team stumbled across Manafort. As one of the former officials recalled, agents were told that he might have leads on where Yanukovych had stashed his money.

As a political consultant, Manafort buffed the image of Yanukovych and autocrats across the world, including Ferdinand Marcos of the Philippines and Mobutu Sese Seko of Zaire (now the Democratic Republic of the Congo). He earned a fortune and spent millions on art, clothes, home theaters, even antique rugs. As the task force heightened its scrutiny of Manafort, the US Treasury Department’s financial crimes unit unearthed a mountain of evidence about him.

Eight banks filed 23 “suspicious activity reports” between 2004 and 2014, which includes the years that Manafort and his consulting company, Davis Manafort Partners, worked for Yanukovych. These reports, reviewed by BuzzFeed News, show that between October 2008 and July 2013, Manafort’s personal and business accounts received about $30 million from banks in offshore havens such as Cyprus, Kyrgyzstan, and St. Vincent and the Grenadines.

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By law, banks must file suspicious activity reports with the Treasury Department when they spot transactions that bear hallmarks of money laundering or other financial misconduct. Such reports can support investigations and intelligence gathering — but by themselves they are not evidence of a crime.

Throughout 2014, the Treasury's Financial Crimes Enforcement Network, or FinCEN, conducted further investigation into the transactions flagged in the bank’s suspicious activity reports. Treasury officials requested additional information from law enforcement agencies in other countries, and they prepared numerous and extensive reports about Manafort's financial dealings. Those reports — sent to FBI agents and federal prosecutors, and reviewed by BuzzFeed News — stated that Manafort appeared to be running shell companies and that his transactions often lacked a clear business purpose and showed signs of “layering,” meaning that they seemed designed to obscure the original source of the money.

In the summer of 2014, an FBI special agent questioned Manafort at his attorney’s office in Washington, DC. Manafort denied knowing anything about money reportedly stolen by the Yanukovych government, according to internal FBI emails reviewed by BuzzFeed News, and promised to turn over documents to the Bureau. He never did, according to the two officials.

“We had him in 2014,” one of the former officials said. “In hindsight, we could have nailed him then.”

The FBI’s top brass, both of the former officials said, deemed Manafort’s suspected financial crimes as too petty: They amounted to only tens of millions of dollars — small potatoes compared to what Manafort’s boss, Yanukovych, was suspected of stealing.

But the task force didn’t get Yanukovych either. The US government, the former officials said, devoted far too few resources to build a case of the scale and complexity needed to prosecute the former Ukrainian president, and agents assigned to the task force left because they felt they were unable to properly do their jobs.

When the investigation petered out, the reports on Manafort and the detailed financial records that supported them were all shelved, two former law enforcement officials who worked on his case told BuzzFeed News. But banks continued to send in suspicious activity reports on transactions involving Manafort or his companies all the way through 2016. For instance, in April and September 2015, PNC Bank flagged two transactions for a total of about $75,000.

The special counsel’s investigation

In May 2017, Mueller was appointed to investigate “any links and/or coordination” between the Trump campaign and the Russian government. In late July, FBI agents raided Manafort’s home, seizing financial and tax documents. In September, according to the two former law enforcement officials, Mueller’s team dusted off the FBI’s investigative files on Manafort and used them to help indict him the following month, in late October.

But the $18 million cited in that indictment leaves millions more in transactions flagged as suspicious, and three current and former law enforcement officials said that Mueller’s team is poring over them as it considers leveling new charges against Manafort. On Sunday, the Los Angeles Times reported that Manafort's business partner, Rick Gates, intends to plead guilty to fraud charges and will testify against Manafort.

Among the transactions not in Manafort’s October indictment are $5 million in suspicious transfers to and from Maho Films Investment Company, based in Puerto Rico. Bank officials flagged the transactions, made in 2003 and 2004, as suspicious because Manafort refused to provide invoices and payment documents showing what the money was to be used for. The company was registered at an office building in San Juan, and its principal business was “investing in film industry projects and other lawful activity,” according to a 2003 certificate from the Puerto Rican government.

Manafort and his friend, tech entrepreneur Hector Hoyos, were the directors. Hoyos told BuzzFeed News that he and Manafort established the company to obtain film-related tax credits from the Puerto Rican government and that he left the company “in 2004 or 2005.” During his time as a director, he said, he was unaware that any funds came into Maho.

“As far as I knew there was no activity,” Hoyos said. “It’s news to me that there was money moving into the company.”

While Manafort managed Yanukovych’s affairs, he also sent $1.2 million to a group of political consultants close to Russia. Bank officials said the transactions were suspicious because the funds came from financial institutions based in offshore havens, and it was unclear to bankers what the money was specifically to be used for.

Among those recipients was someone Manafort worked with for years: Konstantin Kilimnik, a Russian Army–trained linguist on whom US intelligence agencies have collected information. The Washington Post reported that during the US presidential campaign, Manafort emailed Kilimnik, offering to give “private briefings” about the race to a Russian oligarch close to Putin. Manafort’s spokesperson told the Post that no briefings ever took place and that Manafort was merely offering to give a “routine” update on the campaign.

Between 2009 and 2013, Manafort's companies sent Kilimnik more than $325,000 in wire transfers that banks flagged as suspicious, citing reasons such as the money came from offshore companies or the transfers might have been connected to Yanukovych's 2010 presidential election victory. In a report to the FBI, the Treasury’s financial crimes unit said the wire transfers seemed to serve no legitimate business purpose or could be related to “political corruption.” Kilimnik did not return phone calls over the weekend.

The records also show banks tracked much smaller transactions made by Manafort. Some of these were flagged because they showed suspected debit card fraud or structuring, which means money was withdrawn or deposited in amounts below the threshold that would trigger an automatic alert by the bank.

For instance, in June 2006, Wachovia Bank officials noted that a Manafort company account registered two cash withdrawals of $7,500 apiece about four hours apart and at different branches.

Wachovia officials also flagged $25,000 in “fraudulent charges” at Duane Reade stores in New York City in September 2007. Bank officials said the debit card was in Manafort’s possession during that time.

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Jason Leopold is a senior investigative reporter for BuzzFeed News and is based in Los Angeles. He is a 2018 Pulitzer finalist for international reporting, recipient of the IRE 2016 FOI award and a 2016 Newseum Institute National Freedom of Information Hall of Fame inductee.